Cisco beating expectations and a wider than expected loss on Freddie Mac resulted in another positive session with the Nasdaq leading the way up and the oil trading lower.
ECONOMIC DATA8:30 a.m. Initial Claims10:00 a.m. Pending Home Sales3:00 p.m. Consumer Credit
YESTERDAY’S MARKETSThe E-mini S&P opened lower and bounced to 1281.25 where sellers stepped in and tried to push the markets lower with the Sp’s reaching 1276.50. From there the index rallied back up to the 1281.50 area just to get sold once again and pushed down to 1275.25 helped by the E-mini Nasdaq, which tested the 1856.00 area, where a double bottom that coincided with a favorable oil inventories resulted in a strong short-covering rally that, once it broke up the 1281.00 area on the S&P’s, printed new highs on the intraday charts. The E-mini S&P reached 1285.50 and the E-mini Nasdaq got as high as 1891.00. A feeble pullback to the 1281.00 area on the S&P invited buyers to step in and the index rallied back up to 1285.00 posting a lower low while the Nasdaq made a new high at 1893.50. The E-mini S&P tested the 1281.00 level and rallied to new highs as the crude oil resumed its downtrend. The S&P’s reached 1291.75 and the Nasdaq to 1906.75, where the rally ended resulting in a pullback that tested the 1286.50 and 1896.00 areas for the S&P’s and Nasdaq respectively, before bouncing back modestly into the end. For the day, the E-mini S&P closed higher 4.75 points at 1287.75, the E-mini Nasdaq gained another 27.00 point and settled at 1896.00 and the Russell closed up 4.10, at 725.40. The Dow ended the session up 40 points at 11656.
MARKET COMMENTARY AND OUTLOOKYesterday I wrote: “This positive reaction from the last Monday’s lows could be able or, to continue to move higher for the next six to eight days, despite some consolidation that could be seen during today’s trading session or fail and move lower to test the July lows and keep a consolidation process, that ultimately will move the indexes to new lows that complete the bear campaign and then to a long term consolidation process. For today’s trading session, on a higher opening I will wait for the rally to stall, maybe after the first 30-40 minutes of the session, and I will try to go short with tight stops, but probably the first decent pullback will be a buying opportunity. So both sides should offer good entries unless the indexes get knocked out strongly. Keep a close eye on the Crude oil as another wave of selling on that contract could give the equity indexes another boost. Remember that a clear breakout of the 11600 area on the Dow and 1287.00 on the E-mini S&P will be the first indication of a move that could reach higher prices during the coming sessions.”
We came into the session waiting for a reversal after yesterday’s huge rally, but also pointing that its extension and strength seemed to be too much for this to happen. So our most probable scenario was to see the markets rally at the beginning and then offer a buying opportunity on the first decent pullback. Yesterday’s advance and close above the 1287.00 area on the S&P’s and 11600 on the Dow is the first indication that this rally could get more legs and probably reach the 1330.00-1340.00 area during the next eight days. For that to happen, a second close above those areas will have to be seen today. Yesterday’s high on the S&P that has matched the July 23 high will have to get crushed to eliminate the risk of a failure at this level. So we have two possible scenarios, one pointing for a continuation of this move with very strong upside momentum and the second one a fiasco that bring prices back to the most recent lows. I personally think that there is still a chance of a reversal, but I won’t stay in front of the train if yesterday’s highs get exceeded.
So, for today’s session, I will go short only if the indexes are trading in negative territory, and if that happens I will look to short the bounces during the session as we could see the markets trading down, but I will avoid the short side if the markets are trading in positive territory.
TODAY’S SESSIONFor today’s trading roadmap and intraday updates, please read the authors bio.
TODAY’S SUPPORT, PIVOT AND RESISTANCE LEVELS
S&P
NASDAQ
RUSSELL
Resistance 4
1304.00-1305.50
1926.00-1928.00
738.20-739.00
Resistance 3
1299.00-1301.00
1918.00-1919.50
734.50-735.60
Resistance 2
1293.00-1294.50
1908.50-1910.25
730.80-731.80
Resistance 1
1289.00-1290.00
1902.00-1904.00
727.00-728.40
PIVOT
1285.00
1886.00
722.00
Support 1
1286.00-1284.25
1895.75-1894.00
724.00-722.80
Support 2
1280.00-1278.50
1885.00-1883.50
719.60-718.00
Support 3
1273.75-1272.00
1872.00-1870.00
714.20-713.50
Support 4
1268.00-1266.75
1864.00-1862.00
708.00-707.10
S&P
NASDAQ
RUSSELL
FIBONACCI
FIBONACCI
FIBONACCI
1318.45
1988.86
752.67
1314.55
1976.89
749.13
1308.25
1957.50
743.40
1301.95
1938.11
737.67
1298.05
1926.14
734.13
1291.75
1906.75
728.40
1285.45
1887.36
722.67
1283.50
1881.38
720.90
1281.55
1875.39
719.13
1275.25
1856.00
713.40
1268.95
1836.61
707.67
1265.05
1824.64
704.13
1258.75
1805.25
698.40
1252.45
1785.86
692.67
1248.55
1773.89
689.13
DAILY PROJECTIONS
S&P
NASDAQ
RUSSELL
AS DAILY HIGH
1298.00
1926.00
734.00
AS DAILY LOW
1281.50
1876.00
719.30
Support, pivot and resistance levels courtesy of Arturo Stern, who authors the E-mini Daily Trading Advisory, which gives technical analysis on all of the major stock index futures contracts. For more of his analysis, go to www.theminitrade.com. Arturo can be reached at arthur@theminitrade.com.
Futures and options trading involve risk. You must be aware of the risks and be willing to accept them in order to invest in the futures and options markets. This is neither a solicitation nor an offer to buy or sell futures or options. No representation is being made that any account will or is likely to achieve profits or losses similar to those discussed in this document. The past performance of any trading system or methodology is not necessarily indicative of futures results.
